Release Date: February 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Techstep ASA (OSL:TECH, Financial) reported a significant improvement in profitability, with EBITDA adjusted doubling in 12 months and increasing tenfold over two years.
- Recurring revenue increased by 6% year over year, reaching an all-time high, with own software showing double-digit growth of 11%.
- The company generated a positive cash flow from operations of NOK26 million in the last quarter.
- Techstep ASA (OSL:TECH) successfully expanded its service delivery, with several new signings and renewed contracts, including a large contract with ISS and SL in Sweden.
- The company entered a strategic partnership with a leading IT vendor, marking its entry into the Ireland and UK markets, which is expected to enhance operational efficiency and customer experiences.
Negative Points
- Techstep ASA (OSL:TECH) faced a net loss of NOK4.5 million in the period, primarily due to non-cash items such as amortization of intangible assets.
- The company experienced a dip in transactional revenues from consulting and aftermarket services, resulting in a 2% reduction in advisory and services revenues year over year.
- There is uncertainty and difficulty in predicting the ramp-up time for new partnership agreements, which could impact future revenue growth.
- The company is undergoing a comprehensive restructuring, which involves significant changes in strategy, commercial focus, and internal processes, potentially leading to short-term disruptions.
- Techstep ASA (OSL:TECH) faces high competition and pressure on margins, particularly in the Swedish market, which began the year with challenges.
Q & A Highlights
Q: Techstep has down adjusted the ambitions for the next years. In Q4, you do further adjustments. What is the cost of the company coming in such a situation? Can we expect that you will continue adjusting down the outlook in '25 as well?
A: Morten Meier, CEO: We are aware of Techstep's history and are resetting market expectations. We see great potential and are increasing profitability quarter over quarter. However, many projects are complex with dependencies and integrations. We have no ambitions to adjust the 2025 guidance negatively.
Q: I mentioned that the peak sales in Q4 was in the beginning, mid-quarter. How has the market developed in '25?
A: Morten Meier, CEO: We have a strong pipeline and backlog due to partnerships like Sykehuspartner. There is tough competition, but we are positive about continued growth in Q1 and the next quarters. We aim to continue the growth trajectory seen in Q3 and Q4.
Q: Can you elaborate on the strategic entry into the Ireland and UK markets?
A: Morten Meier, CEO: We have entered a letter of intent with a leading IT vendor to adopt our life cycle platform as their standard solution for device as a service offerings. This partnership aims to enhance operational efficiency and customer experiences, with customers onboarded in Q4.
Q: How are the new partnership agreements expected to impact recurring revenues?
A: Ellen Solum, CFO: We believe partnerships with DeviceNow, ICE, and a European IT vendor will generate exponential growth in recurring revenues. However, as onboarding has just started, the reported recurring revenue at the end of '24 includes insignificant amounts from these agreements.
Q: What are the expectations for Techstep's growth and profitability in 2025?
A: Morten Meier, CEO: We expect strong growth in both recurring revenue and net gross profit, both growing double digits with acceleration through the year. We aim to become the leading mobile and circular tech company in Europe, with continued strategy and execution.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
